Buying or Selling a Condo in Litigation in South Florida: Red Flag or Opportunity?

You’ve found the right condo, and then you hear it: the building is in litigation. Do you walk away? Not necessarily. A lawsuit is a red flag or an opportunity depending on who is suing whom, over what, and who is paying. From Brickell and Edgewater to Sunny Isles Beach, Bal Harbour, Surfside and Fort Lauderdale, condo lawsuits are now part of the landscape. In the most recent public count (March 2025), 696 buildings in Miami-Dade, Broward and Palm Beach sat on Fannie Mae’s confidential “unavailable” list, and pending litigation is one of the most common reasons a building lands there. This guide covers both sides: what a lawsuit means if you’re buying, what it means if you’re selling, and the exact steps our team uses to protect clients either way.

Prefer a quick overview first? Watch our territory managers’ short video:

Why Condo Lawsuits Are Rising

Four forces have pushed litigation into almost every condo conversation in South Florida.

• Post-Surfside laws. Florida now requires milestone structural inspections and structural integrity reserve studies (SIRS), refined again by HB 913 in 2025. These rules bring repair needs to the surface. When the bill is large, the question of who pays (the developer, a contractor, an insurer or the owners) often ends up in court.
• Aging buildings. Almost 90% of units listed across South Florida are in buildings 30 years or older, according to ISG World data reported by WLRN. Older towers carry the largest repair bills.
• Tighter lending. On August 3, 2026, Fannie Mae and Freddie Mac retired the Limited and Streamlined review paths for established condo projects (Fannie Mae Lender Letter LL-2026-03; Freddie Mac Bulletin 2026-C). More buildings now get a full project review, so litigation gets flagged earlier.
• A shorter clock. Florida’s SB 360 (2023) cut the statute of repose for construction defect claims from 10 years to 7. Associations that find a defect have less time to sue, so they file sooner.

Our view: more litigation is partly a sign the system is working. A building pursuing a developer or insurer over a defect it found is often in better long-term shape than one that never looked.

Is It a Deal-Breaker? Ask Three Questions

If you take one idea from this article, take this one.

1. Who is suing whom? An association suing a developer to recover repair costs is a very different story from an association being sued.
2. Over what? A case involving structural soundness or safety carries far more weight than a dispute with a vendor.
3. Who is paying for it? If insurance is defending the claim, owners may have little exposure. If owners are funding the legal bills, expect assessments.

These are close to the questions a lender will ask. Under the Fannie Mae Selling Guide (Sec. B4-2.1-03, Ineligible Projects), a project is generally ineligible when the association or developer is a party to pending litigation over safety, structural soundness, habitability or functional use. Freddie Mac follows similar standards. Minor matters can still qualify, for example when the claimed amount is known, the insurer has agreed to defend and the policy covers it.

Buying a Condo in Litigation

The cons

• Financing gets harder. If the case touches structure or safety, a conventional loan will likely be unavailable. As a financed buyer, your best route is usually a portfolio lender, which may require a larger down payment and a higher rate. Hard money is a last resort. Build that cost into your offer.
• The repair bill is likely coming. In many older towers, the lawsuit is a symptom of a repair already identified. Legal fees, deductibles and repairs often reach owners through special assessments. At the Cricket Club, a 50-year-old waterfront tower in North Miami, assessments reached $134,000 per unit. Assume the bill is coming unless the documents clearly show otherwise.
• Disruptions to lifestyle. Construction noise and closed amenities or areas of the building can affect your experience and weaken your unit’s appeal if you rent it.
• Time and uncertainty. Cases can run for years, and no one can promise the outcome. If the case is still open when you sell, your buyer faces the same hurdles you did.

The pros

• Cash buyer leverage. With conventional buyers on the sidelines, cash buyers face a much smaller field. Those who stay have real room to negotiate on price, credits and terms.
• The lawsuit can fund the fix. When the association is the plaintiff, a recovery generally goes to the association to pay for repairs. Buy before that money arrives and you may be buying the problem at a discount while the solution arrives at no extra cost.
• An active board is a good sign. A board pursuing claims is protecting the asset. The building that deserves more concern is often the one with no litigation and no inspection or reserve reports on file.

Selling a Condo in Litigation

The cons

• You must disclose it. Florida sellers must disclose known facts that materially affect value, and the case will appear in the association documents anyway. Downplaying it rarely works and can create liability and complications even after closing.
• A smaller buyer pool. If conventional financing is restricted, most financed buyers fall away, and many simply look for a building free of lawsuits.
• Offers price in the unknown. Possible assessments, legal costs and timing all show up in your offers, often with a clause requiring the seller to settle all dues before closing.
• Late-stage collapses. The costliest outcome is a contract that looks solid for weeks until the buyer’s lender flags the case in underwriting.

How to come out ahead

A lawsuit doesn’t take away your market. It changes it.

• Choose your next move on the facts. As an owner, you see the case, the documents and the building’s finances before any buyer does. Sell now, rent or wait for the case to resolve, with every material fact in hand.
• Lead with disclosure. If your association is the plaintiff, say so. A building working to fix its problems is a very different proposition from a building being sued.
• Market to buyers who can close. Cash buyers are a major force in South Florida, and portfolio lenders can often close regardless of the case. Confirm financing early.
• Hand buyers a complete file. Buyers discount uncertainty. The right documents turn an unknown into something they can evaluate.
• Price from the comps. An aspirational price sits. A price built on recent closed sales attracts a qualified buyer.

Our Six-Step Approach: Buying or Selling a South Florida Condo in Litigation

A condo lawsuit doesn’t have to derail a purchase or a sale. These six steps are how the David Siddons Group at Douglas Elliman helps clients measure the risk and minimize its impact.

For buyers: six steps before you buy

Your document review period is short, so start the day your contract is signed.

1. Review the condo questionnaire and all litigation disclosures. Identify every pending case, the parties and what each one is about.
2. Read recent board and membership meeting minutes. Minutes often reveal what disclosures don’t: planned repairs, assessments under discussion and how the board views the case.
3. Request the milestone inspection and SIRS reports. Compare recommended repairs to the reserves to see whether a special assessment is likely.
4. Confirm with your lender early whether the building qualifies. Since August 3, 2026, most established buildings need a full project review, so ask on day one.
5. Ask whether insurance is defending or covering the claim. Insured claims usually mean less exposure than cases funded by the association.
6. Have a Florida real estate attorney review the case filings. The court documents, not the summary, show the real stakes and likely timeline.

For sellers: six steps before you list

Preparation is what separates a smooth sale from a deal that falls apart late.

1. Request the estoppel certificate and condo questionnaire early. Know exactly what buyers and lenders will see before they see it.
2. Get a plain-English case summary from the association. A clear explanation helps buyers understand the case instead of fearing it.
3. Learn which lenders will finance in the building. Screen offers and avoid late-stage loan denials.
4. Disclose everything you know, in writing. It protects you legally and builds trust with serious buyers.
5. Price with the litigation in mind, using recent closed sales. A comp-based price attracts qualified buyers.
6. Be ready to answer buyer questions clearly. Work with your agent so the case is explained calmly and consistently at every showing.

Get a Straight Answer on Your Building

A condo lawsuit is never something to ignore. With the right questions, documents and team, it can be managed, and sometimes turned to your advantage. Whether you’re buying or selling in Sunny Isles Beach, Brickell, Bal Harbour or anywhere in South Florida, send us the building name and we’ll review the case documents, the lender picture and the comps with you.

Email [email protected], call or text (305) 615-6463, or book a free 30-minute call at a time that suits you. David and one of our Territory Managers will answer your questions.

This article is for general information only and is not legal or financial advice. Consult a Florida real estate attorney and your lender about any specific property or case.